Correlation Between Taylor Morrison and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Taylor Morrison and Geely Automobile at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Taylor Morrison and Geely Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taylor Morrison Home and Geely Automobile Holdings, you can compare the effects of market volatilities on Taylor Morrison and Geely Automobile and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Taylor Morrison with a short position of Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taylor Morrison and Geely Automobile.
Diversification Opportunities for Taylor Morrison and Geely Automobile
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Taylor and Geely is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Taylor Morrison Home and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings and Taylor Morrison is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Taylor Morrison Home are associated (or correlated) with Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Taylor Morrison i.e., Taylor Morrison and Geely Automobile go up and down completely randomly.
Pair Corralation between Taylor Morrison and Geely Automobile
Assuming the 90 days trading horizon Taylor Morrison Home is expected to generate 0.76 times more return on investment than Geely Automobile. However, Taylor Morrison Home is 1.32 times less risky than Geely Automobile. It trades about 0.09 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about 0.06 per unit of risk. If you would invest 2,900 in Taylor Morrison Home on September 12, 2024 and sell it today you would earn a total of 3,550 from holding Taylor Morrison Home or generate 122.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Taylor Morrison Home vs. Geely Automobile Holdings
Performance |
| Timeline |
| Taylor Morrison Home |
| Geely Automobile Holdings |
Taylor Morrison and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Taylor Morrison and Geely Automobile
The main advantage of trading using opposite Taylor Morrison and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taylor Morrison position performs unexpectedly, Geely Automobile can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Geely Automobile will offset losses from the drop in Geely Automobile's long position.| Taylor Morrison vs. Apple Inc | Taylor Morrison vs. Apple Inc | Taylor Morrison vs. Apple Inc | Taylor Morrison vs. Apple Inc |
| Geely Automobile vs. BYD Company Limited | Geely Automobile vs. MERCEDES BENZ GRP ADR14 | Geely Automobile vs. Superior Plus Corp | Geely Automobile vs. SIVERS SEMICONDUCTORS AB |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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